Free Markets, Free People
E. J. Dionne, naturally, makes an effort today in the WaPo to do exactly that. Speaking of Obama and Democrats in Ohio and Colorado, he talks indirectly about the auto bailout:
None of this surprises Sen. Brown, a proud pro-union liberal who campaigned with Obama in Ohio last week. Brown notes that Obama has gained ground in his state both by being tough in enforcing trade rules on behalf of American companies and by pursuing a “high-end manufacturing strategy” that appeals to the nation’s “historical pride in manufacturing, and in making things.”
For Brown, who faces reelection this year, one of the voters he keeps in mind is the “guy in Zanesville who made big things with his hands and now has gone from $17 an hour to $11 an hour.”
The candidate who speaks to voters like Brown’s Zanesville worker — and to his white-collar equivalent in Colorado — is likely to win the election. Mitt Romney hopes the national unemployment rate will get them to vote Republican. Obama’s challenge is to offer an economics of national pride and renewal that answers the sense of betrayal these voters began feeling long before he took office.
That outlines some of the problem the Obama record has. Of course, unspoken here is the auto bailout and how that effected workers. The implication is the bailout was a net positive. Of course Obama, et al, think that workers will reward him for that move.
But the entire record of the auto bailout on the left has been one of spin. And most of that spin has been about as disingenuous as one can imagine. Even Dionne creeps around it by mentioning that the workers took a haircut in average salary (well, at least for new workers).
However, the assumption is that’s the worst that happened (hey, at least they still have a job) and workers will be grateful. Or, business as usual, a politician used taxpayer money and debt to buy votes, you have a problem with that?
Well yes, I do.
In fact, the auto bailout is a case study in crony capitalism. It is a situation where government interfered and overruled normal bankruptcy procedures, reorganized the payback priorities so debt holders were stiffed, bought up the majority of the stock in the new company (GM) and handed much of the control to a favored constituency (labor).
Then they told an absolute lie (GM has paid back its debt) and have consistently pretended that all is well with the company when it is not. This is the real result of the bailout:
General Motors (GM) shares fell to a fresh 2012 closing low of 19.57 on Monday. The stock hit 19 in mid-December, the lowest since the auto giant came public at $33 in November 2010 following its June 2009 bankruptcy.
Normally you might say, tough luck investors. But this is Government Motors. The Treasury still owns 26.5% of GM, or 500 million shares. Taxpayers are still out $26.4 billion in direct aid. Shares would have to hit $53 for the government to break even.
Those shares were worth about $9.8 billion as of Monday. That would leave taxpayers with a loss of $16.6 billion.
But that’s not the full tally. Obama let GM keep $45 billion in past losses to offset future profits. Those are usually wiped out or slashed, along with debts, in bankruptcy. But the administration essentially gifted $45 billion in write-offs (book value $18 billion) to GM. So when GM earned a $7.6 billion profit in 2011 (more on that below), it paid no taxes.
Include that $18 billion gift, and taxpayers’ true loss climbs to nearly $35 billion.
So that’s ground truth on where GM stands today. But that’s not helpful to Obama, is it? So how can Obama and company make this picture seem a little brighter? Well good old crony capitalism, that’s how. We have the end of the 2nd quarter nearing and it is critical to the spin of how well GM is doing to see good 2nd quarter results, no?
The upcoming earnings announcement by GM is, politically, the most important to date. The pressure is on Government Motors to appear financially strong as this may be the last earnings report before November elections and sets the stage for how "successful" GM is.
Well guess who is buying GM vehicles in huge quantities (HT: Steve)?
We now learn that government purchases of GM vehicles rose a whopping 79% in June.
The discovery of the pick-up in government fleet purchases at the taxpayers’ expense comes just weeks before GM announces its second quarter earnings. Overall fleet sales (which are typically less profitable than retail sales) at Government Motors rose a full 36% for the month, helping to drive decent sales improvements year over year.
Wow. What a surprise. Add a few accounting gimmicks:
One of GM’s past tricks to help fudge earnings numbers has been to stuff truck inventory channels. Old habits die hard at GM. According to a Bloomberg report, "GM said inventory of its full-size pickups, which will be refreshed next year, climbed to 238,194 at the end of June, a 135 days supply, up from 116 days at the end of May." 135 days supply is huge, the accepted norm is a 60 day supply. The trick here is that GM records revenue when vehicles go into dealership inventories, not when actually sold to consumers.
And you’re likely to see a “good” earnings report even when the stock is at an all time low, inventories are huge and crony capitalism instead of real sales is the means of spinning the news in a positive direction.
Remember that when you hear the GM “success story”.
I continue to hear the left bravely or blindly asserting that Obama’s fine and will pull off re-election with relative ease. I even hear that on the right from some.
My political gut says no. It’ll be close. No one is really that enamored with Mitt Romney. However, in the end, it will be Romney.
Why do I speak with such apparent certainty? Well, as I’ve mentioned in the past, there are certain types of polls I keep an eye on. They could be characterized as “temperature” polls I guess as in taking the temperature of the nation. Direction of the country is one I like to watch. Here’s another for example:
Two-thirds of likely voters say President Obama has kept his 2008 campaign promise to change America — but it’s changed for the worse, according to a sizable majority.
A new poll for The Hill found 56 percent of likely voters believe Obama’s first term has transformed the nation in a negative way, compared to 35 percent who believe the country has changed for the better under his leadership.
The results signal broad voter unease with the direction the nation has taken under Obama’s leadership and present a major challenge for the incumbent Democrat as he seeks reelection this fall.
Two points. One the poll is of “likely voters” which is a much stronger and accurate demographic than “registered voters”. Secondly, the 35% of satisfied likely voters pretty much mirrors the percentage of Democrats in the US. What that says to me is independents are overwhelmingly dissatisfied with the president.
That’s not good news for the Obama campaign.
Then there is enthusiasm, something we talk about because it is an intangible that is critical to any election. It is critical to any GOTV effort. Those that are more enthusiastic about the election for whatever reason (love their candidate, don’t like the other candidate, etc.) are more likely to make the effort to vote and be receptive to a GOTV effort.
That too seems to be running against Obama:
Independent of voter opinions about how the country has changed, The Hill Poll found an overwhelming majority of voters — 89 percent — view the choice between Obama and Romney as important in terms of the future impact on the country.
Almost half (47 percent) say they are paying more attention to this year’s election than the 2008 vote. Republicans are generally paying more attention than Democrats — 56 percent to 44 percent — to the 2012 campaign compared to 2008.
The Hill, which conducted the poll, wants you to believe that independents, which they also identify as “centrists”, are pretty evenly split over the two candidates. But their 56/35 finding doesn’t support that assertion.
People are not happy with the current situation in the country (with good reason) and for the most part think 4 years is enough time to change it if a president is capable of doing so. It hasn’t happened. In fact, for at least 14.9% of the working population it has gotten worse (as reflected in the U6 unemployment/underemployment number).
That’s a huge number.
What Obama doesn’t have going for him this time is a ground swell of naiveté that bought into the nebulous “hope and change” mantra. He most likely won’t have the youth turnout he had (enthusiasm down badly). He very likely won’t have the squishy Republican vote (the Peggy Noonan vote) he had last time. The “white guilt” vote has, for the most part, been assuaged. A black president was elected and got his chance. Add those in with his loss of the independent or swing voters, and the margins become very thin.
Obviously the swing states, as usual, will determine the outcome. But even in the swing states, the margins are razor thin (with Romney leading in many), and that, again, is not a good sign for an incumbent four months out.
This particular temperature check seems to bolster the political gut feeling (a collection of such temperature checks and other rumblings here and there) that this is an incumbent in deep trouble and probably doesn’t yet know the extent of it.
When emphasis is turned on to his record, my guess is the numbers get worse … for him.